Swiss Re has obtained $255 million of four-year protection against a series of natural catastrophe risks.
As part of the transaction, Swiss Re signed a financial contract with PIONEER 2002 Ltd. (PIONEER), a special purpose Cayman Islands exempted company and the issuer of the $255 million of securities. Subsequently, Swiss Re Capital Markets Corporation, acting as sole bookrunner, privately placed the securities with institutional investors.
The proceeds from the offering fully collateralise PIONEER’s financial contract with Swiss Re and will serve to replenish Swiss Re’s capital should any of the specified natural catastrophes occur.
The financial contract provides Swiss Re with protection based on parametric indices tied to natural perils. Under these indices, Swiss Re’s recovery after an event is tied to physical parameters such as earthquake strength or wind speed.
Five of the indices address individual risks, North Atlantic hurricanes, European windstorms, California earthquakes, Central U.S. earthquakes and Japanese earthquakes, while the sixth is a combination of the other indices.
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